The proposed agreement addresses the SEC’s motion for a temporary restraining order but still needs judicial sign-off.
Binance, Binance.US and the Securities and Exchange Commission (SEC) announced a deal to ensure that only Binance.US employees could access customer funds late Friday in the short-term.
According to the proposed agreement, which still needs sign-off from the federal judge overseeing the case, Binance.US will take steps to make sure that no Binance Holdings (referring to the global exchange) officials have access to private keys for its various wallets, hardware wallets or root access to Binance.US’s Amazon Web Services tools. Moreover, the U.S.-based crypto trading platform will share detailed information about its business expenses, including estimated costs, in the coming weeks.
The proposed deal comes in response to an SEC motion to freeze all of Binance.US’s assets while it pursues the exchange on securities-related charges. The regulator said it was concerned that funds could be moved offshore or records destroyed if it was not granted a temporary restraining order (TRO). Binance.US’s attorneys pushed back, saying that freezing all of its assets would amount to the “death penalty.”
Judge Amy Berman Jackson, of the District Court for the District of Columbia, told the parties that it would be better for them to come to an agreement on a proposed stipulation than to have her craft a restraining order, noting that a TRO comes with a two week limit for a more in depth hearing. Two weeks would be insufficient time to prepare, given the more than 4,000 pages of exhibits the parties have already filed, she said during a hearing earlier this week.
Other provisions in the proposed agreement will see Binance.US create new crypto wallets that the global exchange’s employees have no access to, provide additional information to the SEC and agree to an expedited discovery schedule.
U.S.-based customers will still be allowed to withdraw funds during this time.
The proposed agreement, if accepted, will address some of the SEC’s stated concerns as the broader lawsuit it filed works its way through the judicial system. The SEC sued Binance and Binance.US last week on charges of offering and trading unregistered securities, but also alleged massive commingling of funds and poor practices. The proposed agreement does not delve into the broader suit.
